HMRC could recover up to £110 million after it won its case against a tax avoidance scheme promoter.
The case centred around the Disclosure of Tax Avoidance Scheme (DOTAS) rules, which require promoters to tell HMRC about any tax avoidance schemes they design and sell. In this case the provider, Root2, failed to report a mass-marketed tax avoidance scheme known as Alchemy.
The scheme was designed to extract profits from owner-managed companies in the form of winnings from betting on the stock market. The scheme aimed to ensure that these ‘winnings’ would be tax-free, rather than in the form of taxable employment income.
‘This is a great victory that sends a clear message to tax avoidance scheme promoters that we will pursue you if you don’t play by the rules,’ said Penny Ciniewicz, Director General of HMRC’s Customer Compliance Group.
She added that most tax avoidance schemes don’t work, and that the DOTAS rules ensure that HMRC is notified of schemes so it can investigate and challenge them.
‘Designers and promoters of avoidance schemes should come forward now if they haven’t already disclosed a scheme to us,’ said Ciniewicz.
